Funds Outpace Medicaid Costs

WASHINGTON — States are getting relief when it comes to providing healthcare for the poor.

Spending on Medicaid, a state-federal partnership, rose by an average of 2.8% in fiscal year 2006, the lowest rate in a decade. Meanwhile, state revenue rose 3.7%.

That's good news for patients, who could see more services covered, and for healthcare providers, who could conceivably get a raise, according to officials from the Kaiser Family Foundation.

"States reinvest in good times and they trim back in hard times," said Diane Rowland, the foundation's executive vice president. "As we see the return of good times, we'll see some states reinvesting."

Kaiser reported Tuesday that the slower growth in Medicaid came primarily from an improved economy and tighter cost controls enacted by the states. It was the first time since 1998 that revenue grew faster than overall Medicaid spending. The federal government covers about 60% of the program's overall costs, which exceeded $300 billion in the fiscal year ended June 30.

In recent years, states had often frozen or trimmed reimbursement rates for doctors, pharmacists and other providers. They also restricted benefits for certain patients, and thousands have lost their coverage because of stricter income limits.